We're only halfway through August, but Lindsay Lohan, German goalkeeper Manuel Neuer, Cristiano Ronaldo and many more have already voted with their feet. Mykonos, the island made famous in the 1960s by Jackie Onassis and Grace Kelly, has emerged as the undisputed summer queen of hip holiday destinations, giving Greece a boost of optimism after years of turmoil on the frontline of Europe's financial crisis.

They have come like an invading army: Hollywood stars such as Lohan, DJs, singers, footballers and basketball stars, a rollcall of famous names snapped sipping champagne, dancing and partying on Mykonos's famous beaches.

The rediscovery of the "island of the winds" has not only helped to put Greece – whipped for the past six years by a 1930s-style depression – back on the map again. In luring even greater numbers of the international jet set to its shores, Mykonos has also supplanted Ibiza as the de rigueur hangout for celebrities and clubbers alike.

This month Afrojack, one of the world's highest-earning DJs, pronounced that young holidaymakers were "better off" heading to the Cycladic isle because its Spanish competitor had simply become too expensive. "The whole magic you used to have on Ibiza is not possible any more because a ticket is €75 [£60]. I go to Mykonos, play exactly the same thing, and you buy a €10 ticket," the 24-year-old told the BBC. " [In Ibiza] they are too focused on the VIP."

With mega-yachts moored in its harbour, magnums of champagne sold on its beaches and dawn-to-dusk parties at its open-air clubs, Mykonos has reclaimed some of the glamour that made it a bacchanalian paradise for artists and the gay community half a century ago. "You bump into Conchita Wurst [winner of this year's European song contest] and think nothing of it," said one visitor, part of a crowd of six well-heeled gay men from the US who spent a week on the island during a cruise of the Aegean earlier this summer. "You definitely don't think 'crisis' when you are there."

For a country so dependent on tourism, the endorsements could not come at a better time. Against all the odds, Greece has attracted record numbers this year to become the hottest tourist destination on the continent of Europe. Despite a precipitous drop in tourists from Russia and Ukraine – an estimated 300,000 have cancelled holidays following the insurrection and drop in value of the rouble – the Mediterranean country is well on track to surpassing its target of 19 million visitors (21.5 million if cruise-ship visitors are taken into account), almost double the Greek population.

International arrivals at airports nationwide have had double-digit increases, with Athens, once the scene of anti-austerity riots, seeing a 31% rise this year, according to the confederation of Greek tourism enterprises (SETE). Mykonos and Kalamata in the Peloponnese showed increases of 40% and 62.5% respectively. "We are outperforming our competitors," said SETE's boss, Andreas Andreadis. "All the figures show that we have done twice as well as any of them in the first seven months of this year with a 16.5% increase in arrivals overall."

Revenues, he said, were predicted to reach €13bn or just over 17% of gross national output – a huge feat for a nation not only emerging from its longest recession in living memory but struggling with an unemployment rate of 26.7%, the highest in the EU.

"If we surpass 19 million tourists and €13bn in direct receipts, we will, for the first time in six years, see an increase of close to 1% in GDP, compared with the predicted 0.5% this year," added Andreadis. "And it will all have been powered by tourism."

With one in five jobs dependent on the sector, the rebound offers what many are describing as the first ray of light that Greece's worst crisis in modern times may soon be over. Mykonos epitomises the turnaround. But it is far from alone. While supermodels Naomi Campbell and Kate Moss have also been spotted cruising off Patmos (the former having visited Mykonos last year), luxury hotels are reporting a surge in business. Rooms at the newly built €1,800 a night Amanzoe resort in the eastern Peloponnese and the luxurious Costa Navarino resort on the peninsula's southwestern tip – both indicative of Greece's drive to move away from its traditional sun, sand and sea image – are sold out through October.

According to figures due to be released by SETE, visitors have signalled greater overall satisfaction with islands such as Mykonos than Ibiza, Sardinia or St Tropez, its main competitors. In terms of value, the Cycladic island was rated 84.2%, compared with 80.5 % for Ibiza and 79% for St Tropez.

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